Strategic groups and cluster analysis

Abstract

There is still considerable confusion around the concept of strategic groups (SG). In conventional research, cluster analysis has been a dominant methodology to form groups. Whether or under what conditions firms in the industry are 'clusterable' was largely ignored in prior studies. The purpose of this paper is to discuss the problems with cluster analysis in strategic group formation. The setting for the analysis is the UK computer industry. Multiple cluster procedures are employed to form SGs using both secondary data and survey data. Results of different groupings are compared and problems associated with cluster analysis are discussed.